Did you know Pennsylvania is often called the "Snack Food Capital" of the U.S. thanks to its famous pretzels and potato chips? But don’t worry—investing in real estate here isn’t just a quick snack; it’s a full-course opportunity!
Pennsylvania is becoming a popular spot for international real estate investors. With two major cities on either side of the state, there are economic draws. In addition, it has relatively lower housing prices than places such as New York and Boston. Pennsylvania has the makings of a strong investment, with a solid economy, plenty of property options, and favorable market conditions.
This guide includes everything you need to know about investing in real estate and securing a DSCR loan in Pennsylvania. Here’s how to succeed as a Pennsylvania real estate investor.
We are providing the following discussion to you for informational purposes only. All investments, including real estate, involve risk, and we encourage you to invest carefully. The information in this article is not intended to replace or serve as a substitute for any legal, real estate, tax, or other professional advice or service. You should consult with a professional in the respective legal, tax, accounting, real estate, or other professional area before making any decisions or entering into any contracts relating to a rental property.
One of the most flexible loan options for real estate investors is a DSCR loan. Short for debt-service-coverage-ratio , these loans are advantageous to foreign investors looking to buy rental properties.
With a DSCR loan, investors can purchase rental properties in Pennsylvania without the need to reside there. Unlike traditional mortgages, these loans are not based on the borrower’s personal income but instead rely on the property’s cash flow.
This type of financing is particularly advantageous for foreign or out-of-state investors, as it provides more flexibility in terms of documentation and qualifications. By simplifying the process compared to conventional loans, DSCR loans create more opportunities for real estate investors to expand their portfolios in Pennsylvania and beyond.
DSCR loans provide options to simplify investing as a foreign national. Here are the key benefits:
Investing in Pennsylvania real estate as a foreign national is possible and highly advantageous. With Waltz’s variety of DSCR loans, international investors can overcome the typical hurdles of purchasing U.S. property and tap into what Pennsylvania has to offer.
When applying for a real estate investment loan in Pennsylvania as a foreign national, it’s important to understand that every lender has their own underwriting criteria. As such, some lenders are more favorable to international investors than others.
You should know about key themes in the requirements set by most lenders. Below, we break down the different requirements for foreign nationals with most lenders compared to Waltz, a foreign national-friendly lender:
Most lenders: As a general rule of thumb, income generated in the United States is less scrutinized than money from other countries. Lenders require proof of income earned in the United States or an extremely detailed history of your finances in your home country. This can include salary (W2) statements, business revenue, bank records (maybe even requiring a U.S. bank), or other forms of income documentation.
Waltz: While Waltz is obligated to review your income in the United States and abroad, we do so on a daily basis with our customers. This helps us request the right documents and ask the right questions upfront to expedite the process.
In addition, the mortgage options we offer focus on the potential income generated by the rental property you want to buy more so than your personal finances. While that is still important, it’s not the only consideration.
Most lenders: Given the additional requirements for foreign nationals in search of investment property mortgages, 50% of international investors have opted to pay cash to avoid borrowing altogether. However, the lenders that do make it possible for you to get a loan will likely request a higher down payment between 30% on the low end and as much as 50% on the high end. There may also be reserve requirements when getting a loan as well. For example a lender may require a certain amount of additional funds in your bank account to account for rental property vacancy.
Waltz: We typically require a 30% down payment, however in some instances it can be as low as 25%. Depending on your financial situation and other property considerations, there may not be a reserve requirement.
Most lenders: Proof of identification will be required and you will also need to provide your address. Depending on your residency status, there might be certain primary or second home loans available to you. In terms of investment property loans, lenders will likely request that your loan be taken out under an American LLC with you as a personal guarantor on the loan.
Waltz: We verify your identity using a passport from your country of origin, even if that’s outside of the United States! Since we focus on investment property loans, we also require mortgages in the name of an LLC.
Here’s the difference: our Investor Toolkit comes with an LLC and U.S. bank account2– that way, you don’t have to worry about the logistics.
Most lenders: It’s commonplace for lenders to require a minimum credit score– some go as low as 640, but this varies. If you don’t have an American FICO score, most lenders will find it difficult to give you a mortgage as a foreign investor.
Waltz: Investors are not required to have a U.S. credit score. Instead, alternative credit checks may be done using international credit histories or asset-based evaluations.
International investors in Pennsylvania have access to various property types when securing a mortgage such as a DSCR loan. Here are the most common options:
Investing in Pennsylvania real estate has several advantages. Here are a few reasons why Pennsylvania is a great choice:
Pennsylvania offers a variety of cities that cater to different types of real estate investors. Whether you're looking for multi-family properties or single-family investments, these cities provide opportunities to foreign investors:
Philadelphia, or "Philly," is Pennsylvania's largest city and the sixth-most populous in the U.S., with 1.6 million residents as of the 2020 census. It is the heart of the Delaware Valley, the nation's eighth-largest metropolitan area, home to over 6.2 million people. Philadelphia offers a mix of historic charm and modern development. Due to its growing population and thriving business environment, there will likely be a steady stream of renters.
Pittsburgh is Pennsylvania’s second-largest city, following Philadelphia, and ranks as the 68th-most populous city in the U.S., with 302,971 residents according to the 2020 census. Known for its steel industry roots, Pittsburgh has become a technology and education hub. The city’s affordable housing and growing economy make it an attractive choice for real estate investors.
Harrisburg serves as the metropolitan hub for around 400 communities. Its diverse economy supports over 45,000 businesses, with solid representation in service industries like healthcare and a growing tech and biotechnology sector.
This city is known for its affordable housing and growing job market, making it a popular choice for first-time investors or those looking for stable rental income.
Here are key factors to consider before investing in Pennsylvania:
Refinancing your Pennsylvania investment property involves replacing your current mortgage with a new one. The refinancing process typically includes:
Refinancing can offer a way to lower your interest rate or access home equity, but it’s important to carefully consider the terms to ensure it benefits your investment strategy.
Rate-and-term refinancing gives you the opportunity to change the terms of your current mortgage, which could lead to more favorable loan conditions. However, even with a lower interest rate, it's essential to remember that your overall finance charges might end up being higher over the life of the loan.
Cash-out refinancing helps you access your property's equity. For real estate investors, the additional funds from refinancing can be used for home upgrades, debt consolidation, or a down payment on another property. This option provides cash at closing, opening up more opportunities for investment.
Securing a mortgage on an investment property as a foreign national is simple and transparent with Waltz. Here’s a breakdown of how international investors can successfully navigate the mortgage application process:
1. Find a great deal: Start by identifying a property with strong rental return potential in a high-demand area, such as neighborhoods appealing to students, young professionals, or families. Look for locations near amenities like public transportation, schools, and shopping centers, and consider emerging neighborhoods with signs of growth. Research local rental trends to ensure the property has a solid rental history and potential for appreciation.
2. Gather required documentation: Be prepared to submit proof of income, financial statements, and identification such as a passport or visa.
3. Choose a lender who works with foreign nationals: Not all U.S. banks and lenders offer mortgages to foreign nationals, so it’s essential to find one specializing in this area. Waltz helps international investors obtain DSCR mortgages– we even have repeat customers!
4. Set up an LLC and U.S. bank account: Our Investor Kit sets you up with both so that you can start investing right away without delays.2 If you have an LLC already, you can skip this step.
5. Apply for the mortgage: Once you’ve gathered all documentation and double checked that the property will have cash flow, submit your application. Then we’ll review everything to make sure the numbers work for a DSCR loan.3
6. Complete the due diligence process: We’re here to assist you throughout the due diligence process to ensure a smooth mortgage application. We’ll help coordinate a professional appraisal to confirm the property's market value, ensuring it meets or exceeds the purchase price. Our team will guide you in assessing the rental potential by providing insights into comparable properties and local market trends, helping you project realistic income.
7. Close the deal: Once approved, you will go through the closing process, which involves signing the final documents and transferring ownership of the property. After that, you officially own real estate in Pennsylvania!
